Changes to the 2023-2024 IRD kilometre rates

The IRD has announced the kilometre rates, also referred to as mileage rates, for the 2023-2024 income year.  The rates are $1.04 for petrol, diesel, hybrid and electric vehicles for up to 14,000 km.  After 14,000 km, the rates are $0.35 for diesel and petrol vehicles, $0.21 for hybrid vehicles, and $0.12 for electric vehicles. The rates set out below apply for the 2023-2024 income year for business motor vehicle expenditure claims. 

Vehicle typeTier 1 rates (up to 14,000 km)Tier 12rates (over 14,000 km)
Petrol or diesel$1.04$0.35
Petrol hybrid$1.04$0.21
Electric$1.04$0.12

The rates have increased for all vehicle types in both Tier 1 and Tier 2 in light of changing fuel and car maintenance costs.

The IRD has a history of revising the kilometre rates and changing them every year.  Since 2017, the Tier 1 rates have increased by at least two cents per kilometre every year.  However, Tier 2 rates actually decreased in the 2019-2020 and 2020-2021 income years and again went up for the 2021-2022 and 2022-2023 income years due to the high fuel prices.

This year, the IRD has increased the rate for the first 14,000 km by 9 cents, the biggest increase so far.  All rates for kilometres over 14,000 have increased by a cent.

Records you need to keep

You must keep a logbook of your business and personal driving to get Tier 1 reimbursement or deductions for the first 14,000 km (total).   If you don’t keep records of your driving, you can only claim Tier 1 rates for the first 3,500 km of business-related driving.

Source: https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-expenses/claiming-vehicle-expenses/kilometre-rates-2023-2024

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Minimum Wage Increase from 1 April 2024

As a business owner or manager, you need to be ready for the minimum wage rate increase from 1 April 2024.

  • Adult starting wage will go up from $22.70 to $23.15 an hour
  • Starting-out and training minimum wage will go up from $18.16 to $18.52 an hour
  • All rates are before tax and any lawful deductions, for example, PAYE tax, student loan repayment, child support.

If any employment agreements (contracts) are not current or you did not give one to your employees, now is an ideal time to discuss with them in good faith. Update the contract with any terms and conditions that were agreed to by both parties before the contracts were last reviewed. Make sure they include all the mandatory clauses a contract should have by law. Another useful tool is the employment agreement builder if your employees do not have one.

Employment agreement builder

Things an employment agreement must contain

Now is also an ideal time to ensure you know the details around the minimum wage, including that:

  • it applies to all hours worked, unless both parties agree to a higher rate in the employment agreement
  • it applies to employees paid with a salary or piece rates or commission.

Note the minimum wage does not apply in some situations including:

  • employees under 16 years of age
  • where a Labour Inspector has issued a minimum wage exemption permit to an employee who has a disability that limits them carrying out their work.

Minimum wage exemption for people with disability

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Thinking of Becoming a Sole Trader?

When you’re deep in the day-to-day of running your business, it can be hard to keep track of the bigger picture. Or maybe these tasks are simply not your cup of tea. Seeking advice from different sources can give you a fresh perspective on your business. Consider getting help from:

  • a traditional accountant
  • a digital accountant
  • business mentors
  • investment advisors

Seeking advice from an accountant or bookkeeper can free up time for you to focus on what you do best – your job.

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Incorporated Societies Update

The new Incorporated Societies Act came fully into force on 5 October 2023

The Incorporated Societies Act 2022 (the 2022 Act) came into effect on 5 October 2023. To reregister or register for the first time, your society will need to provide a constitution that’s compliant with the 2022 Act. The 2022 Act sets out what you must include in your constitution.

It’s important to understand that a rules document, or constitution, is a key legal document for every incorporated society operating in New Zealand. It sets out your society’s purposes, what it does and how it operates. Your society can only carry out lawful activities that align with the purposes outlined in its constitution. Your officers, committee and members should always refer to this document for guidance about running your society, particularly before making any decisions.

What must be included in your society’s constitution

Every incorporated society must have a set of rules. Under the 2022 Act the rules document is called a constitution. It specifies what must be included in your society’s constitution. These requirements existed before — they are just more clearly set out in the 2022 Act.

For example —

  • Why your society exists – (what its purpose is)
  • How someone becomes a member, and the conditions of membership,
  • The makeup of your society’s committee, its roles, functions, powers, and procedures
  • How your society will hold general meetings, make decisions, and elect or appoint officers

Your society may need to change or add new rules. For instance, your society might need to add rules that are compulsory under the 2022 Act. Such as —

  • The need to have at least one contact person, and no more than 3. You must also include how each contact person is elected or appointed.
  • How members and officers give their consent.
  • The procedure for resolving disputes.
  • Whether, and how, written resolutions may be passed instead of holding general meetings.
  • Distribution of surplus assets – they must be given to a not-for-profit organisation (or a class of organisations) that is identified in your constitution.

Once you’ve re-registered with the Companies Office, you’ll need to let Charities Services know about the changes to your rules. The Companies Office looks after the Register of Incorporated Societies (a different register from the Charities Register) and there are lots of useful resources and information on their website to help you with the re-registration process.

For further information click on this link: https://is-register.companiesoffice.govt.nz/law-changes-for-societies/

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

New Thresholds for Reporting Tiers

The new thresholds are set out in the table below:

TierOld criteriaNew criteria
Tier 1*Total expenses greater than $30 millionTotal expenses greater than $33 million
Tier 2Total expenses less than $30 millionTotal expenses less than $33 million
Tier 3Total expenses less than $2 millionTotal expenses less than $5 million
Tier 4Total operating payments $140,000No change

Source:  Charities Services and External Reporting Board Incorporated Societies » XRB

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change.  We have, to the best of our ability, acknowledged any shared content.  All related links provided to the corresponding websites are subject to change as they are live links.

Changes to the Bright-Line Test

From 1 July 2024 it is proposed the three existing bright line tests will be abolished. In their place there will be a two-year bright line test. Bright line will apply if the bright-line end date is within two years of the bright-line start date. The two years will apply retrospectively from 1 July 2024 so that if the bright-line start date is before 30 June 2022 the bright-line end date will be 1 July 2024 at the latest.

Main home exclusion

  • Where the bright-line end date is after 1 July 2024 the main home exclusion will be based on the predominant use of the land. If it is being used more than 50% for main home then the exclusion from the bright-line test will apply. Note it is actual use of the property not intended use of the property.
  • There is also a time basis. The land must be used most of the time as the main home – more than 50% in total.
  • The main home exclusion cannot be applied more than twice in two years or where a person has engaged in a regular pattern of acquiring and disposing of residential land.
  • If a house is being constructed on the land, the time involved in the construction is excluded from the bright-line calculation. This change is retrospective to property purchased on or after 29 March 2018. Where a person has already returned bright-line income under the previous rules that would now not be taxable, they can apply for a reassessment.
  • Rollover relief will be available for transfers between associated person’s provided they have been associated for at least two years prior to the transfer. Similarly, a transfer to a trust can qualify for rollover relief where the beneficiaries have been associated to the transferor for at least two years prior to the transfer.
  • Rollover relief will also be available in certain circumstances to transactions with companies (including look through companies), partnerships and between trusts.

Disclaimer
Unfortunately, with details changing all the time and at such speed, we need to add that the above content is correct at the time of writing as far as the author is aware and is very much subject to change. We have, to the best of our ability, acknowledged any shared content. All related links provided to the corresponding websites are subject to change as they are live links.

Source:  Tax-e-mail Issue No. 2403